Imagine it’s 1986. Apple has just released a compact computer called the Macintosh Plus. It looks a little like a cinderblock standing on one end, has one megabyte of memory and costs about $2,600. It includes a 9-inch, black-and-white monitor and a built-in disk drive that runs the latest 3.5-inch floppy disk technology.

Now imagine that for the next 25 years, Apple releases no other products: no new computer, no iPod, iPhone, iPad, not even a laptop. The company never expands the memory or the monitor size, though it does eventually offer the Mac in other colors and raises the price.

Apple would not be one of the largest and most successful businesses in the world if it had ignored the marketplace and stopped coming up with new ideas.

Yet while America’s high-tech businesses like IBM, Google, eBay and Amazon have led the world in innovation, the federal government has lagged far behind and shackled the industry with an outdated tax system and policies on trade, patents and Internet regulation that do not suit a fast-changing business environment. Increasingly, it’s become clear that Washington continues to pursue VHS policies in a Blu-ray world.

A recent Gallup Poll found that Americans give the computer industry the highest marks among all business sectors, with 72 percent of those surveyed viewing the industry positively. The same survey found the federal government ranked the worst, with only a 17 percent positive rating.

America’s tax laws hurt high-tech businesses that employ millions and create jobs. So perhaps nowhere is the need for major policy reform more apparent than in our federal Tax Code. The last major rewrite of it was in the Mac Plus year of 1986, before the Internet and the digital economy. Because of Washington’s failure to keep up with worldwide changes in tax policies, U.S. companies, large and small, lose business and investment to competitors in countries with less punishing tax systems. It also means foreign companies are less likely to locate and create jobs here, choosing instead to keep their operations overseas where they have an advantage.

In the decade following the 1986 tax reforms, America’s corporate taxes were about average. But over the past 10 years, other countries looking to boost their economies have been dropping their rates, while Washington embraced the status quo. Since 2000, Germany has dropped its top rate by 22 points and Canada by 13.

Today, America’s combined state and federal corporate tax rate is the second highest in the developed world, topping out at nearly 40 percent. Even Russia, at 20 percent, and China, at 25 percent, are lower.

America also has lost ground as other countries have modernized how they tax earnings from outside their borders. The United States taxes its businesses on their income earned outside the U.S., above and beyond the taxes paid to the country in which it was earned. Out of the top eight economies in the world, only America subjects its job creators to this type of tax system. This handicaps American industry and technological innovation as it competes with foreign businesses.

By some estimates, there is more than $1.5 trillion in earnings by American companies that could be reinvested in our economy if our tax system did not impose a double tax.

As co-chairman of the Congressional Internet Caucus, I also believe we should ensure the Internet remains free of unnecessary regulation and taxation. Earlier this year, I joined Sen. Ron Wyden (D-Ore.) in introducing the Digital Goods and Services Tax Fairness Act. Our legislation will guarantee that consumer purchases of digital goods and services, such as downloaded movies, music and cloud computing services, will not be subject to duplicative and discriminatory taxes by multiple jurisdictions. By clarifying the rules of the road, we can ensure that businesses can continue their astonishing growth as they reach American consumers on the Internet.

Washington should learn from America’s successful high-tech companies by being more responsive to changes in the global marketplace. That includes adopting policies that help those businesses to compete, grow and hire. For instance, President Barack Obama should submit the pending free-trade agreements with Panama, Colombia and South Korea so Congress can approve them. In addition to expanding trade, these agreements contain protections for the intellectual property that are vital to the success of our tech companies.

We should also act swiftly to lighten the regulatory burden on U.S. businesses of all types.

Taken together, these reforms would be the kind of bold agenda needed to get our economy growing again. It would show that Washington is finally ready to help create an atmosphere in which business and our economy can thrive.

Long-term innovative thinking and responsiveness to changes in global markets have allowed our tech companies to become the envy of the world. It’s time for Washington to catch up.

Sen. John Thune (R-S.D.), the ranking member on the International Trade, Customs and Global Competitiveness Subcommittee, is co-chairman of the Congressional Internet Caucus.